Beijing, (Business News Report)|| Oil prices fell significantly, in light of demand concerns due to the closures in China and the possibility of a European ban on Russian crude.
The decline in oil prices comes as investors await the meeting of the OPEC+ alliance tomorrow, Thursday.
At the end of trading on Tuesday, oil prices fell more than 2%, as demand concerns resulting from closures in China to contain COVID-19 covered the possibility of a European ban on Russian crude.
Brent crude contracts ended the trading session as low as $2.61, or 2.4%, to settle at $104.97 a barrel.
US West Texas Intermediate crude contracts closed down $2.76, or 2.6 percent, to $102.41 a barrel.
“There are real concerns about whether Chinese demand, which is a huge factor in global demand, will remain strong in 2022,” said Gary Cunningham, head of trading at Tradition Energy.
Phil Flynn, an analyst at Price Futures Group, said oil price movements are likely to remain volatile as investors weigh the impact of shutdowns in China in exchange for oil sanctions the European Union plans to impose on Russia and ahead of the US Federal Reserve meeting on Wednesday.
In a related context, the OPEC+ countries will start, tomorrow, Thursday, the monthly meeting of the oil bloc, which is facing less urgent pressure to increase crude production, in light of a raging war in Ukraine, offset by a decline in oil prices against the background of the closure measures in China.
As almost every month since the outbreak of the COVID-19 pandemic, the 13 member countries of OPEC led by the Kingdom of Saudi Arabia, with the ten partner countries of the organization led by Moscow, meet Thursday via video to make possible adjustments to their production policies.
Many analysts say that OPEC+, the bloc that was established in 2016 to organize the oil market, will be satisfied once again with a marginal increase in production by about 400,000 barrels per day.
Thus, the bloc will continue to follow its strategy for the gradual increase in its oil production, which began to be implemented in May 2021, in the context of economic recovery from the repercussions of the pandemic, which necessitated a sharp reduction in production after the deterioration of demand.
Since the last meeting of the bloc on March 31, prices have remained within the same margin and ranged between $97 and $115 a barrel for the European benchmark Brent North Sea crude, and between $92 and $110 for the US benchmark WTI.
Recently, oil prices recorded a decline, against the background of fears that the return of closure measures due to the acceleration of the outbreak of the Corona virus in China, will curb the demand for oil in this country, according to the expert of the German commercial bank Commerzbank, Carsten Fritsch.
China is facing the worst outbreak of the virus since the spring of 2020 and has taken strict measures, especially in Shanghai, where the authorities have imposed a month ago on the population of 25 million people to stay at home.